Appraiser Targeted for Foreclosed Home

It has been almost a decade since the subprime mortgage crisis rocked financial markets across the world. In response, we saw the introduction of the Dodd-Frank legislation, civil suits against many of the country’s largest banks, and the emergence of a new market for purchasing defaulted loans. Since this initial flurry of activity, the economy has slowly recovered and the topic largely disappeared from the public eye. However, the legal wake continues to reverberate in the foreclosure litigation arena, with mortgage holders continuing to search for additional sources of recovery on loans secured by underwater homes.
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Does Client Know You’re Uninsured?

Between required law school classes and the Multistate Professional Responsibility Examination, attorneys are given considerable training on the rules of professional conduct before starting a career. Attorneys get further refreshers on the rules when reviewing potential clients and the occasional issues that arise during representation. But how many attorneys review the rules of professional conduct that apply to the specific jurisdictions in which they practice? Considering the heavy overlap between the different states and model rules of professional conduct, doing so may seem like a waste of time. It isn't. Attorneys who fail to review their particular states’ rules do so at their own risk as distinctive rules do exist in many states.
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A Recap of 2016

There was considerable activity within the professional liability community in 2016. As a result, there was much to discuss. As we've done in past years, we've taken a close look at what was most interesting to you in 2016 with an eye toward maintaining your interest this year. Like 2015, thousands of you read about the risk management issues facing a response to legal audit letters. You were also very interested in the FLSA and FMLA. Many readers were interested in the tricky concept of pleading the Fifth Amendment in the civil context. Next, the most read post focused on how an eroding malpractice policy could spur litigation. Finally, in terms of the most read posts, you were interested in when a malpractice claim arises.
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Liability for Inadvertent Metadata Disclosure

In the modern practice of law, attorneys are expected to be familiar with discovery of electronically stored information. Often this involves the production of files in their native format, which preserves metadata such as the document author, dates of creation and alterations, and where the document was stored. Production of electronic information thus facilitates document review, but also could lead to the disclosure of information that is beyond the scope of permissible discovery.
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When Does the Clock Start?

The application of the statute of limitations affirmative defense is theoretically simple, yet practically complex. Often, the issue is when does the clock start; i.e. when does the claim accrue. The result varies by state and may come down to the specific fact pattern. The water may be muddied further if the plaintiff incurs more than one injury. This is relevant to the professional malpractice community. Take for example a recent California accountant malpractice case involving state and federal audits and $10 million on the line.
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Auditor Dismissed from $50 Million Securities Class Action Suit

In a decisive win for the malpractice community, an independent auditor achieved dismissal in a securities fraud class action lawsuit by way of a 12(b)(6) motion. The Middle District of PA dismissed some of the claims against a troubled bank and all claims against the bank’s public offering underwriter and its outside auditor. The court accepted the auditor’s arguments that the plaintiff had failed to establish the requisite element of scienter necessary to maintain a securities fraud claim and, moreover, had failed to properly plead that the auditor did not “honestly hold” its audit opinions with reference to the 2015 U.S. Supreme Court Decision in Omnicare. Given the stakes of this litigation, like many securities claims, the victory may serve as an important template for other auditors to follow when faced with similar claims.
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Liability for Lax Data Security

Clients entrust professionals with personal information. As such, professionals have an ethical duty not to disclose confidential information in a manner not permitted by the client. However, in today’s electronic age, professionals are also expected to take proactive steps to ensure that third-parties do not access confidential client information without authorization. Professionals who fail to prioritize client data security could expose themselves to civil liability.
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No Privity? No Problem

In New York, privity is required in order to maintain a legal malpractice claim. In other words, the claim must be client v. former attorney “absent special circumstances.” But under what special circumstances would a court be inclined to find legal malpractice in a non-privity situation? A case this past week shed some light on what one of those situations may look like.
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Is the Unfinished Business Doctrine Finished?

Many professionals do not end their careers where they started. Professionals are on the move. The vast majority of professionals are impacted by the transition of a colleague from one firm to another. In fact, with the increase in online media covering the legal industry in particular, news of partner transitions is readily available. In a recent California case, a trustee of a bankrupt law firm has taken the position that the dissolved firm should retain all ongoing legal fees from cases started at the firm. This could have significant impact on how professionals transition their practice.
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Objecting to Objections

Attorneys strive to be zealous advocates for their clients. Not surprisingly, when defending depositions, attorneys are often tempted to object to questions that they perceive to be damaging to their client’s case, even if the question itself is not improper. Attorneys should be cautious, however, to avoid making excessive objections that are not likely to be sustained.
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